LAND PRICING AND PROPERTY PRICES

Abstract

This study seeks to explore the impact of land pricing on private housing prices from the first quarter of 1993 to third quarter of 2002. The reasons cited for increasing costs to Singapore's businesses are invariably down to escalating land prices (Straits Times, Insight March 20, 2002). Faced with stiff competition from regional players, it would be useful for decision makers, developers and investors to examine the link between land pricing and Singapore's competitiveness. Employing the cointegration analysis, the study shows that overall private housing prices is cointegrated with Land Sales, Gross Domestic Product, Consumer Price Index, as well as the Prime Lending Rate. An error correction mechanism is also incorporated in the estimation of changes in the overall private housing price to account for the short-run deviations from the equilibrium relationship among these variables.